Freelance journalist and content writer

Calculating the Real Cost of Third Party Distribution

Hotels are being put under increasing pressure to up their game in the online market, as online travel agencies continue to have the edge. The question many are asking is, “What action do hotels need to take?”

At a recent conference, Peter O’Connor, Professor and Director of the MBA in Hospitality Management at Essec Business School, explained how each hotel needs to look at its own business case before it takes action.

He gave the example of two hotels — one running at 50% occupancy and the other running at 90% occupancy with 40% of its bookings coming through OTAs. For the first, his recommendation was that the hotel should sign up with an OTA at any price. For the second, they should focus more on their own direct marketing efforts to replace more OTA bookings with self-generated ones.

However, his advice goes further. Hotels need to calculate the real distribution costs of using a third party against the cost of self-generated business.